partnership report ITSO compliant Smartcard ticketing system Date of Meeting: 10 October 2008 Date of Report: 1 October 2008

Transcription

1 ITSO compliant Smartcard ticketing system partnership report Date of Meeting: 10 October 2008 Date of Report: 1 October 2008 Report by Assistant Chief Executive (Operations) 1. Object of report To seek the agreement of the Partnership to proceed to competitive tender for the supply of an Integrated Transport Smartcard Organisation (ITSO) compliant smartcard system including Host Operator and Processing System (HOPS), card management, payment and retail system. 2. Background a) Technology and the Passenger Over the past decade a growing confidence has been created in the public s acceptance of electronic payments in the form of remote mobile phone top-ups, direct debiting, credit and debit card transactions and, most recently, purchases over the internet. These payments in many cases are made anonymously without the user even having a bank account. Regrettably, payment for a trip on public transport has not embraced this. Fares are still being paid in cash at the time of travel, or prepaid in advance for zonal, fixed number of trips or seasonal ticketing. b) Integrating Ticketing Most studies, in analysing poor utilisation of public transport and citing all the lost health, environmental and community benefits, generally conclude that there is a lack of effective integration for trips between modes. This continues to be one of the principal reasons why people choose not to make use of public transport. Despite the plethora of bus services provided, there remains a lack of information, constantly changing timetables and route variations, poor quality of some of this provision, an apparent lack of multi-modal integration and inconsistency and confusion over fares. These are issues facing the private sector providers, government and local authority agencies, who have a common aim of increasing public transport use, yet with entirely different imperatives to be met. Worldwide, there are many more recent examples of ticketing integration that have dramatically changed the perception of the pubic transport journey and none more so in the UK than London s Oyster card. Many major cities have excellent examples of smartcard ticketing being the catalyst for modal shift away from cars, with Hong Kong, FLR4/RTP101008_AGENDA7 (16:10) Page 1 of 7

2 Delhi, Seoul, Paris, Madrid, and New York being excellent examples. However, in most cases these cities do not have the complexity of a fully de-regulated, shareholder valueled bus market to contend with. For example, Oyster operates substantially within a closed transport system for bus and underground services with income belonging to Transport for London (TfL), whereas SPT engages with over one hundred operators of multi-modal services. Nevertheless, the introduction of smartcard technology, as part of a package of infrastructure investment, fleet upgrades, improved travel information and simplicity in pricing has facilitated huge increases in the utilisation of public transport. In Hong Kong, with a population of around 7 million, there are now over 14 million smartcards in circulation as the travel proposition has been widened to effectively provide the same card for low value retail transactions. These transactions occur mostly in proximity to transport hubs, in the form of fast food and convenience purchases, although the retail experience is hugely significant in Hong Kong. Despite the complexity of the UK market, outwith the regulated London experience, there is no doubt that a fully integrated smartcard ticketing solution will simplify the journey for regular users. Importantly, this will be significantly more attractive and encourage new users. There is increased flexibility from internet purchase of ticketing, simple tap on payment, on-line and remote top-up of e-travel ticket purse values. Access, not only to all public transport modes with one ticket, but progressively the ability to make new choices of best price propositions through regular-user discounting, commonplace elsewhere, the smartcard experience should be a huge success. c) A National Ticketing Framework In recent months, the media exposure to integrated ticketing has risen dramatically. The Scottish Government announced the release of its Integrated Ticketing Strategy, prepared by Transport Scotland (TS) who has the responsibility to establish the overarching strategy and manage the existing free National Concessionary Scheme. The trade market place has been awash with conference upon conference and speaker upon speaker promoting the virtues of smartcard and integrated ticketing. Simultaneously, some adverse publicity has also emerged on the security implications of ticketing technology algorithms. This has triggered some high profile court cases to protect software suppliers from code hackers threatening to publish the mechanism for fraud. As with all emerging technologies, the challenge for industry is to stay one-step ahead with security protocols to prevent fraudulent use of tickets and lost revenue. This is not dissimilar to the concerns in the early days of credit cards. Whilst these are very real issues, the software and security providers continually introduce new higher levels of protection on these products, generally meaning that, despite the risk, we all continue to regularly use our credit cards. Smartcards will be no different as their use creates a dependency. d) SPT Predating the more recent innovation of smartcards, for over 20 years SPT has had the only truly effective multi-modal, multi-operator card in existence with its Zonecard scheme. This scheme distributes annual ticket sales income of around 15 million to FLR4/RTP101008_AGENDA7 (16:10) Page 2 of 7

3 operators, based on a sample of surveys, but the introduction of smartcards would in future facilitate an accurate allocation. The continuation of the existing sampling methodology is not ideal in this highly competitive environment. Zonal schemes do not easily translate into smart ticketing, although ticketing solutions do exist more typically in the form of a travel purse, rather than pre-paid journeys. There are strengths and weaknesses for each type of card operation: The zonal card is simple, being pre-paid and with ease of use, although complex on-vehicle equipment is needed to categorise zonal areas and there is the need for a re-imbursement formula. The stored travel purse is simple for the on-vehicle transaction and there is no need for a re-imbursement formula, simply a payment to the operator for the fare less agreed administrative costs. However, there is the need for the provider to have full banking credentials to hold money in trust, effectively as a bank. Each has its merits, however the transit purse elsewhere has emerged as the most commonly used method. e) Smartcards and the Concessionary Traveller In April 2006, the Scottish Government launched the free National Concessionary Bus Scheme, to permit free travel on all buses across Scotland. The scheme was launched well in advance of the technology solution necessary to operate the smartcards, which were issued to each eligible user, with some 1.4 million cards currently in circulation. As part of the scheme agreement with bus operators Transport Scotland would issue, on a free of charge basis, new smartcard-enabled ticket machines for all 7,500 buses in Scotland. Installation of these machines began in 2008 and will continue across the country, over the next year or so. Approximately one third of all bus passengers will be using this new smartcard for concessionary journeys. However, this investment provides the main platform for the launch of commercial smartcard products for bus operations, which account for over three quarters of all public transport trips. One quarter of all journeys within the SPT area will therefore be smart, with the potential for the addition of up to twice that on bus. Other plans need to be developed to deal with rail, subway and ferry operations. SPT s own Subway has issued its tender documentation to secure a smartcard enabled new gating and ticketing system, which will be ITSO compliant. Pilot schemes are also running on selective ScotRail services. SPT has responded positively to the Transport Scotland Smartcard strategic document. As the public transport authority for the west of Scotland, SPT has confirmed that it wishes to be the principal delivery agent for the new scheme. This delivery is intended to be encompassed within a partnership agreement with Transport Scotland, private sector system integrator and card management companies and it is anticipated that any scheme developed should ultimately be suitable for wider use across the country. FLR4/RTP101008_AGENDA7 (16:10) Page 3 of 7

4 The free concessionary scheme, already in existence, provides the basic elements necessary to operate a commercial application. These consist of a card, smart-enabled ticket machines (so far only on buses), intelligent processing on bus and in the depots to extract the data, communications capability to connect to the central processing system (Logica HOPS). As a minimum, it will be necessary to introduce a dedicated HOPS to process commercial transactions, agree a re-imbursement formula and provide an administrative capability created to make payments to bus and other transport operators. In making use of many of the existing elements in the new commercial system, a new ticketing scheme will require to have the facility for the purchase of a smartcard. This can be at an SPT outlet, from remote ticket machines, from any retail scheme partner or via the internet, where the vast majority of transactions generally occur. Cards can be either: anonymous, simply having a unique reference number and an initial cash value dispensed from card issuing machines (very appropriate for a tourist smartcard), or registered, with a full management service and the ability to automatically top-up an account on-line or in any retail outlet (as with the registered Oyster card facility, which can cancel lost smartcards and restore the remaining value on a replacement card.) f) Smarter than just travel What should not be underestimated is the opportunity of retail to stimulate public transport use. The travel smartcard can easily be partitioned to act as an E-Purse, being pre-loaded with electronic money. It is envisaged that any transport card scheme will also be the launch platform for a low value transaction E-Purse to facilitate passenger access to leisure activities such as the cinema and fast food, and convenience purchases. 3. Outline of proposals a) An SPT smartcard within Scotland s National Ticketing framework Unless the public transport authority takes strategic responsibility, for introducing an area-wide common solution, the current impetus on delivering integrated ticketing will inevitably end up with a wholly un-integrated response. Individual transport groups, software developers, local authorities, and entrepreneurial card management companies are entering the market place. As a result, what may emerge are a number of loyalty schemes which could fulfil the operator s imperative of providing smart ticketing and become brand dependant. Such an outcome would obviate the true benefit of multi-modal, multi-operator accessibility from one purchase and in one seamless transaction. This is a concern shared by Transport Scotland and therefore a collaborative arrangement, between TS and SPT, is a far more robust undertaking than the market being controlled by individual commercial entities. FLR4/RTP101008_AGENDA7 (16:10) Page 4 of 7

5 As the public transport authority for the Strathclyde area and the manager of the highly successful Zonecard Forum, SPT is ideally placed to lead this project. At this developmental stage, there is an emerging realisation that a scheme of this nature can only be fully effective if delivered in partnership. Probably, this will be as a joint venture arrangement with Transport Scotland, other interested public sector parties, particularly Improvement Services, as issuer of the National Entitlement card, and the successful bidder who will provide the card services delivery solution. Progressively, over the next few months, smart-enabled buses will become more obvious to the regular traveller as the hitherto show and go cards have in future to be validated by smartcard readers. The benefits of integration beyond bus need to follow. In the Subway, we also have a need to replace the time-expired ticketing, gating and back office system. Zonecard tickets are a paper-based card with a magnetic stripe capability to facilitate rail and Subway journeys. This arrangement operates as a Ticketing Forum, and is desperately in need of restructuring with the creation of a formal ticketing company. SPT has access to a range of transport applications to test the smartcard system including on its ferry service, on its DRT services, its Subway and with Transport Scotland on rail, thereby permitting all four modes to be robustly trialled. The formal standard, required in the national Integrated Ticketing Strategy, is adoption of the ITSO messaging systems for all transport transactions. This will be requested in our tender specification, although bidders who have proven solutions which can emulate or operate in tandem with ITSO certified smart enable ticketing machines should not be precluded from responding to the tender document. The basic elements of a smartcard processing system exist for bus transactions, through the use of the National Entitlement Card, which carries the Free Concessionary Travel application. However, the system has not been configured for commercial ticketing and will need to provide point of sale, card and account management services, payment to the operator and cater for low value retail applications. b) The Tender If agreed by the Partnership any tender developed will be for the provision of a turnkey commercial smartcard system that will: Process stored value, pre-paid travel and e-purse retail transactions. Be ITSO compliant and certified and must provide, both on vehicles and fixed sites, a transaction processing time of 500 milliseconds or less, Be able to be operate as an anonymous card, dispensed from a point of sale retailer or vending machine, without personal bank details being required. Provide a smartcard facility for holders wishing to register their card. Have card and account management facilities to permit personalisation, automatic top-ups and discounting / loyalty opportunities. FLR4/RTP101008_AGENDA7 (16:10) Page 5 of 7

6 Enable cards to be ordered, and topped-up on-line via SPT, TS or partner web sites. Handle cards with sufficient capacity to permit operation, of stored travel rights, as a zonal scheme, to replicate the success of Zonecard. Enable cards to be read by existing on-bus smart enabled ticketing equipment supplied in Scotland by Wayfarer, ERG and Almex or other providers. Specify the installation of a new, or the utilisation of existing HOPS services, or an alternative method of integration with a dedicated HOPS to process commercial (non concessionary) transactions. Be provided by an organisation which will be able to demonstrate full FSA credentials to manage money on an E-Purse or Stored-value basis. Assuming processing fees are necessary; these must be competitive with transaction costs that are reasonable and sustainable. Be able to pay operators promptly, for the trips undertaken by the cardholders. Expandable to integrate with retail transactions, either with unique vendorbased card readers or via existing card reading networks. Provide within the tender for the respondents to define opportunities for any joint venture undertaking and the commercial parameters offered. It is not intended that the technical specification will be definitive. Instead, software and systems solutions providers are expected to promote a number of different central processing solutions, albeit all based on the smartcard ticket. It is envisaged that the joint venture entity would wish to maximise these technical responses by issuing a specification of requirements based on functionality and customer experiences rather than a technical specification and to minimise ongoing administrative costs by fee sharing, for re-investment in transport solutions. c) Indicative costs The breakdown of costs will vary depending on the type of solution proposed in the tender submission, but broadly, it is envisaged that it will include: development of a HOPS to process commercial (non-concessionary) smartcard, E-purse and Stored Travel Rights (ZoneCard) transaction; development of an FSA approved operator payment and reimbursement system; supply of a Smartcard and on-line account management and card top-up system. FLR4/RTP101008_AGENDA7 (16:10) Page 6 of 7

7 4. Consequences Policy consequences: Legal consequences: Financial consequences: Personnel consequences: Social inclusion: Risk consequences: None. Legal consequences will be dependent upon the preferred method to take the project forward. A corporate entity may have to be established or partnership agreements entered into. Conditions of contract will require to be agreed and European procurement procedures followed in addition to the possibility of agreeing grant funding terms. Further contracts will be required with transport operators. None, unless the proposal was to proceed in this financial year. None. The benefits of an effective multi-modal, multi operator, cashless card permitting low value convenience purchases is a significant benefit to achieve a safer and more integrated society. None. 5. Partnership action The Partnership is asked to note the proposals to proceed to competitive tender and agree that officers determine the most appropriate arrangements through the issue of a tender specification for the supply of a Smartcard System with joint venture/partnership arrangements with Transport Scotland and appropriate partners. The successful tender proposal will be presented to a future Partnership meeting. Gordon Maclennan Assistant Chief Executive (Operations) Ron Culley Chief Executive for further information please contact Eric Stewart, Director, Bus Operations, ext 3177 FLR4/RTP101008_AGENDA7 (16:10) Page 7 of 7